Iron Mountain Incorporated agreed to purchase MAG DATACENTERS, LLC, which operates FORTRUST, a private data center businesses for total consideration of approximately $128 million. The transaction would deliver more than 9 megawatts (MW) of existing data center capacity and provide expansion capability for an additional 7 MW.

FORTRUST is a leading provider of multi-tenant data center space in the Colorado/Mountain region and owns one of the nation’s first Tier III Gold colocation data centers. FORTRUST has operated in the Denver market for 15 years and enjoys a strong regional presence while also serving as a critical location for customers seeking East-West data center redundancy.

At June 30, 2017, FORTRUST’s data center operations comprised a state-of-the-art facility totaling 210,000 sq ft of space, including 71,000 rentable sq ft of colocation space. The existing space provides approximately 9 MW of power capacity, 75% of which is leased to a diversified base of 250 customers. FORTRUST’s top 25 customers represent approximately half of annualized revenue.

The acquisition will provide Iron Mountain with expansion potential within FORTRUST’s existing facility of approximately 38,000 rentable sq ft of colocation space that will support another 7 MW of high-density capacity.

Mark Kidd, senior vice president and general manager, Iron Mountain Data Centers, said, “Iron Mountain has operated in the data center business for more than 20 years and delivered consistent, solid internal growth. With this acquisition – our first in the data center business – we are expanding our network to better serve target customers for whom our reputation for enhanced security, customer service and compliance are important factors in data center selection. This acquisition, together with Phase I of our Northern Virginia campus, will bring total capacity to more than 30 MW with the ability to expand to more than 70 MW across our data center properties.”

Steven Knudson, CEO of FORTRUST, said, “We are excited by the potential this transaction with Iron Mountain represents, giving our customers access to a larger portfolio of locations and services while still receiving the highest level of customer service and operational quality FORTRUST has delivered for over 15 years.”

The transaction is subject to customary closing conditions and anticipated to be completed prior to the end of the third quarter. The company intends to fund the purchase with a combination of approximately $73.5 million from a private placement of stock to the seller and $54.5 million in cash. The stock will be unregistered and subject to restrictions on resale under Rule 144 of the Securities Act. The company projects a stabilized return of in the mid teens following build-out and lease-up of the expansion capacity. The company expects earnings per share dilution of $0.01 to $0.02 in 2017 and for the acquisition to be accretive in 2019 following integration.

“Our expanded geographic platform and deep customer relationships within both our data center and data management businesses will accelerate our momentum in this attractive business,” said Iron Mountain president and CEO William L. Meaney. “We continue to see opportunities to expand our business through strong organic growth, new development and acquisition. Together with our existing data centers and completion of the first phase of our Northern Virginia data center campus next month, this acquisition will strengthen the foundation of a long-term growth engine and help accelerate the growth in our adjacent businesses.”